Stocks trade mixed after inflation reading
NEW YORK -- Wall Street turned higher today as another drop in oil prices helped offset concerns about a jump in inflation last month. The Dow Jones industrial average rose more than 150 points.
Stocks drew support from oil prices that pulled back for a second straight day on concerns that a slowing economy will curtail demand for fuel. Light, sweet crude fell $4.09 to $134.65 on the New York Mercantile Exchange, compounding a drop of $6.44 on Tuesday.
Meanwhile, bond prices fell sharply as investors retreated from the safety of government debt.
And a decision by Wells Fargo & Co. to boost its dividend countered some of the market's concerns about the health of banks. The San Francisco-based bank's move to raise its payout to investors is being seen as a bullish sign for the troubled banking sector. Still, the Labor Department's report that consumer prices shot up in June at the second fastest pace in 26 years is reminding investors that rising prices still pose a threat to economic growth.
Investors also remain worried about the economy and specifically the financial sector. This week has brought fresh attention to potential trouble spots in the mortgage market. Fannie Mae and Freddie Mac, the government-chartered mortgage financiers, remain a concern, as do regional banks that could have bad mortgage debt on their books.
But, for the moment, investors were pleased by the drop in oil.
"I think the pullback in oil is significant. The market and the market participants clearly had digested what the impact was going to be if oil prices had stayed at that level," said Dan Genter, president and chief investment officer of RNC Genter in Los Angeles.
In early afternoon trading, the Dow rose 161.45, or 1.47 percent, to 11,123.99. On Tuesday, stocks ended mostly lower on continuing worries about the financial sector and the Dow logged its first close below 11,000 since July 2006.
Broader stock indicators also rose after fluctuating in the early going. The Standard & Poor's 500 index advanced 13.66, or 1.12 percent, to 1,228.57, and the Nasdaq composite index rose 44.28, or 2 percent, to 2,259.99.
Advancing issues narrowly outpaced decliners by about 2 to 1 on the New York Stock Exchange, where volume came to 819.01 million shares.
